Uffish Thoughts: When the Celtic Tiger Became a Puddy Tat December 4, 2011

From 1995 to 2007 Ireland, once one of the poorest of European nations, experienced an economic boom that made its economy the envy of every nation in Europe. Indeed, for a period of time after the Euro (€) became the official currency of most of the European Union it appeared that the new currency might eclipse the American dollar and the Japanese yen as the new powerhouse in the world’s financial markets.

That’s all over now as financial bad news travels like a flue pandemic from Greece to Italy to Spain and on to France and Germany. The Celtic Tiger, which thrived on Euros provided from the Eurozone (those EU nations that used the Euro as a common currency) got downsized to a puddy tat early in the game, months before the current crisis began in 2008.

We arrived in London early in October of that year and stepped out of our hotel in Chelsea to read headlines screaming Black Friday in SECOND COMING type. By that time Ireland was a nearly a year into the sort of economic trouble that everyone else was soon to experience. By the time we went there last fall, the Republic had already received its version of a bank bailout (what all the others now seem to want). The North didn’t seem to be quite as badly off, but it will share whatever fate hits the rest of the United Kingdom when it comes.

Currency in Ireland is confusing. The Republic in the south uses the Euro, but the North, still linked to Britain, continues to use the pound sterling (£), so you have to carry both currencies if you’re travelling there. By far the most convenient thing to do is use a credit card, but there are still times when you need cash.

Both Irelands are full of reminders that the Celtic Tiger has stopped romping. In the north this seemed to express itself in a large number of vacant or not quite completed apartment buildings and condominiums. There were also a lot of office and mercantile spaces to let.

In the south, from what we saw, it was a little more dramatic.

We drove past large subdivisions that were unoccupied and unfinished. In Calgary unfinished portions of a subdivision (or “new communities” as they like to call them) would have completed homes occupied and signs of construction surrounding the remaining lots. In Ireland there might have been two or three units occupied out of a dozen or more, and then some partially built shells at the end of the lane where, as our tour guide would say, the money ran out.

Rampant development pressure, speculation against future profits, unsecured mortgages and loans – the same sorts of things that triggered the American collapse that went round the world in 2008 and haunts us still – were at the root of the problem.The Anglo Irish Bank was one of the big offenders. The incomplete shell that was to have been its grand new headquarters along Spencer Dock in Dublin is a monument to the hubris of its managers.Buildings along that dock are indicators of the vast overconfidence that consumed financiers in those heady days of the Tiger. There’s a former warehouse that’s been turned into a pretty spiffy looking mall, only it seemed that half the spaces in it were currently vacant when we made a “comfort stop” there. Down the street was the building the locals called “the tube in the cube”, a new Convention Centre Dublin.Several other financial institutions and civic structures had gone up along that dock area during the boom, but as with the subdivisions, you can see exactly where the money ran out.

They stopped work on the new headquarters for the Anglo Irish Bank in 2009 and the bank itself was nationalized the same year. Since its main business now is to wrap up the mess caused by its overextended loans to developers, it has been renamed the Irish Bank Resolution Corporation. The incomplete skeleton of the building is eight stories high, its concrete and steel open to the wind and rain and salt air.

One interesting Internet reference was an analysis by an engineer, who suggested that the framework, especially the unsealed concrete, would soon deteriorate beyond safety parameters if nothing were done to protect it from the elements.

Reading that I felt like I was looking at a metaphor for the entire Eurozone economy.

The Irish have a funny name for the incomplete building. They call it the Taj Mahal. Now, I realize that the original is a magnificent building in India, but the point of the joke is simple. The original Taj Mahal was also built to be a tomb.

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* The Tube in the Cube – The Convention Centre Dublin, known to locals as the Tube in the Cube, is one of the pretentious remnants of the Celtic Tiger real estate boom.